In 2009, Paragon issued a Relocation Client Advisory to owners of homes that were built with Chinese Drywall. During the housing boom, new construction was at an all time high and domestic producers of drywall were unable to keep up with the demand. To keep up with the overwhelming demand for drywall due to new construction during the housing boom, China offered a viable solution; the necessary supply of goods, as well as lower costs to builders. In 2009, Chinese Drywall joined the ranks of radon, synthetic stucco, and toxic mold as red flags in home inspections which are detrimental to a homeowner’s ability to sell; impacting both marketing efforts and the value of the home.
In September, 2010 the IRS issued guidance providing relief to homeowners suffering property losses due to the effects of the affected drywall. According the Revenue Procedure 2010-36:
- Individuals who pay to repair damage to their personal residences or household appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment.
- Taxpayers who have already filed their income tax return for the year of payment generally have three years to file an amended return and claim the deduction. The amount of a loss that may be claimed depends on whether the taxpayer has a pending claim for reimbursement (or intends to pursue reimbursement) of the loss through property insurance, litigation or otherwise.
- In cases where a taxpayer does not have a pending claim for reimbursement, the taxpayer may claim as a loss all unreimbursed amounts paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances resulting from corrosive drywall.
- If a taxpayer does have a pending claim (or intends to pursue reimbursement), a taxpayer may claim a loss for 75 percent of the unreimbursed amount paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall.
This was posted by
Mike Morabito – who has written 210 posts on The Paragon Relocation Blog.
Mike has over 10 years of relocation experience working for Paragon Relocation. Mike is recognized by Worldwide ERC as a Certified Relocation Professional (CRP) and a Global Mobility Specialist (GMS).
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